Financial reporting

Question 1

Objective of financial reporting

Answer 1

The objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity

Question 2

Financial statements

Answer 2

Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of cash flows

Question 3

Contents of the financial statements

Answer 3

Financial position - information about economic resources used & about liquidity, use of resources & financial position
Financial performance
Changes in financial position - information about investing, financing & operating activities

Question 4

Elements of financial statements

Answer 4

Income
Expenses
Assets
Liabilities
Equity

Question 5

Fundamental qualitative characteristics of financial information

Answer 5

Relevance

Faithful representation

Question 6

Enhancing qualitative characteristics of financial information

Answer 6

Comparability
Verifiability
Timeliness
Understandability

Question 7

Accounting concepts

Answer 7

Business entity
Materiality
Going concern

Question 8

Underlying assumptions of financial statements

Answer 8

Going concern

Accrual Accounting

Question 9

Measurement bases

Answer 9

Historic cost
Current cost
Realisable (settlement) value
Present value

Question 10

IAS 1 - accounting concepts

Answer 10

Going concern
Accrual basis of accounting - income & expenses are aligned to the same accounting period
Materiality & Aggregation - each material class of similar items is to be presented separately in the statements
Offsetting - it is not permitted to offset assets against liabilities
Frequency of reporting - it is required to produce financial statements at least on annual basis
Comparative info - requirement to show the figures from previous periods for all amounts shown in the financial statement